KUALA LUMPUR: The Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) between Malaysia and the United Kingdom (UK) is expected to boost trade and investment for both nations.
The agreement, which will come into force for the UK on Dec 15 this year, will be the first free trade agreement between the UK and Malaysia.
Investment, Trade and Industry Minister Tengku Datuk Seri Zafrul Andul Aziz said the UK remains a strategic trading partner for Malaysia, with total trade reaching RM14 billion (US$ 3.0 billion) in the first 10 months of 2024.
"Moving forward, with both countries in the CPTPP, I am confident that these numbers will improve, through increased Malaysian exports.
"Furthermore, UK exporters can also leverage on the 16 FTAs the Malaysia has ratified, including the Regional Comprehensive Economic Partnership (RCEP) and many others," he said at the official ceremony of UK countdown to CPTPP entry-into-force here today.
Tengku Zafrul said the CPTPP will result in 94 per cent of tariffs eliminated between the UK and Malaysia over the course of the implementation period.
He said the CPTPP will enable local businesses to benefit from duty-free exports, boosting not only established sectors like electrical and electronics (E&E) and machinery and parts but also opening new prospects for Malaysia's commodities such as palm oil, rubber, and timber in the UK market.
"As Malaysia's first bilateral free trade agreement with the UK, Malaysian exporters now have better access to the UK market, whose economy breached US$4 trillion in 2023.
"Malaysia's CPTPP membership has certainly boosted our competitiveness, while fostering better integration of our exporters into the global supply chain," he said.
Econonist Dr. Geoffrey Williams offered a more cautious view on the agreement's significance for Malaysia.
He argued that while the CPTPP holds great potential for Malaysia as a member of a large economic bloc, the UK's role in the partnership is marginal.
"The UK is largely irrelevant to CPTPP and Malaysia because trade flows between the two are tiny, amounting to only RM14 billion in 10 months of 2024," he said.
Williams highlighted that Malaysia's total trade amounted to RM2.14 trillion as of September 2024, with the UK's share representing just 0.65 per cent.
He stressed that Malaysia's trade priorities lie with Asean, China and emerging economies within the BRICs (Brazil, Russia, India, and China).
"A single foreign direct investment (FDI) contract, such as one from a US data centre, can surpass the total value of UK-Malaysia trade. This underscores the limited economic significance of the UK to Malaysia," he added.
Williams also noted a historical lack of UK focus on Malaysia as a trade partner.
In recent years, the flow of investments had been more prominent in the opposite direction, with Malaysian companies investing heavily in UK real estate.
While the CPTPP provides avenues for enhanced trade, experts believe Malaysia's broader trade strategy should remain focused on its key regional and global partners.